Amazon's free shipping attracts 88% of shoppers

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Dive Brief:

About 88% of Amazon shoppers said the promise of free shipping is what compels them to shop with Amazon, according to a report from data-driven marketing firm Epsilon that was emailed to Retail Dive, which is aimed at helping brands better understand how to work effectively in the Amazon-dominated shopping era.

From its own data, and a survey of 3,000 consumers, Epsilon created an Amazon customer profile suggesting that the average customer earns more than $100,000, is between 45 and 54 years old and is married. More than 80% own their own home, and more than 50% have a net worth of $500,000 or more, according to Epsilon's report.

Other key factors that affect why shoppers choose Amazon include the e-commerce giant's credit offering, the ease of its return policy, the notion that Amazon is a "one-stop shop," and the availability of two-day or next-day shipping.

Dive Insight:

Epsilon also found that the top 1% of Amazon Prime members spend more than $3,200 annually in an average of 19 transactions, for an average transaction value of about $171, while the top 1% of Amazon shoppers who are not Prime members spend roughly $2,560 in about 17 transactions a year worth an average of $151.

One of the more intriguing points the study makes is that Amazon is not necessarily holding shoppers captive with all of its draws, like Prime membership benefits and brand selection. Rather, Epsilon posits that Amazon's customers tend to shop and spend just about everywhere else, too. While Amazon captured as much as 44% of online sales in 2017, an intimidating figure, that does still leave a lot of shopping to be done online elsewhere, not to mention offline.

The report's findings bring to light many of the fears retailers have about Amazon, namely that the only way to "beat" Amazon is by joining it — selling their own products through Amazon as a marketplace partner, a decision that runs the risk of undermining their own brand value, as the company has been known to base its own private labels off of successful third-party products.

But perhaps the biggest obstacle to overcome is Amazon's dedication to free shipping — something customers are demanding more and more of — which retailers find it tough to replicate, given the cost of covering shipping, especially for smaller items. Undeterred, the e-commerce giant recently expanded which items ship for free, launching a $10 and under section with no shipping fees and lowering the free shipping threshold to $25 in May.